A05856 Actions:

A05856 Memo:

NEW YORK STATE ASSEMBLYMEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)

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BILL NUMBER: A5856
SPONSOR: Towns (MS)
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TITLE OF BILL: An act to amend the civil practice law and rules, in
relation to mandatory settlement conferences in residential foreclosure
actions and requiring good faith settlement discussions in connection
with such foreclosure actions
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PURPOSE OR GENERAL IDEA OF BILL: This bill would require both mortga-
gor and mortgagee to make good faith efforts to reach a mutually agree-
able resolution that at a minimum, follow the guidelines of the United
States Department of the Treasury Home Affordable Modification Program.
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SUMMARY OF SPECIFIC PROVISIONS: This bill would add a good faith
standard to be applied to negotiations between parties in a foreclosure
action settlement conference, which does not presently exist.
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EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: Section 1 (a) of
rule 3408 of the Civil Practice Law and Rules was added by Chapter 472
of the Laws of 2008.
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JUSTIFICATION: In 2008, the Legislature enacted the New York Respon-
sible Lending Act, which became Chapter 472 of the Laws of 2008. This
statute required mandatory settlement conferences for loan modifications
in order to encourage resolution of foreclosure ations and keep mortga-
gors in their homes. While the settlements have been successful, not-
for-profit housing counselors and attorneys have indicated that a stron-
ger and clearer standard would benefit the goal of settlement
conferences.
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PRIOR LEGISLATIVE HISTORY: A8945 2009, Referred to Judiciary Commit-
tee
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FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: This bill will
not have an impact on state finances.
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EFFECTIVE DATE: This act shall take effect immediately.

A05856 Text:

STATE OF NEW YORK
________________________________________________________________________
5856
2011-2012 Regular Sessions
IN ASSEMBLY
March 2, 2011
___________
Introduced by M. of A. TOWNS, STEVENSON, COLTON -- read once and
referred to the Committee on Judiciary
AN ACT to amend the civil practice law and rules, in relation to manda-
tory settlement conferences in residential foreclosure actions and
requiring good faith settlement discussions in connection with such
foreclosure actions
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision (a) of rule 3408 of the civil practice law and
2 rules, as added by chapter 507 of the laws of 2009, is amended to read
3 as follows:
4 (a) In any residential foreclosure action involving a home loan as
5 such term is defined in section thirteen hundred four of the real prop-
6 erty actions and proceedings law, in which the defendant is a resident
7 of the property subject to foreclosure, the court shall hold a mandatory
8 conference within sixty days after the date when proof of service is
9 filed with the county clerk, or on such adjourned date as has been
10 agreed to by the parties, for the purpose of holding settlement
11 discussions pertaining to the relative rights and obligations of the
12 parties under the mortgage loan documents, including, but not limited to
13 determining whether the parties can reach a mutually agreeable resol-
14 ution to help the defendant avoid losing his or her home, and evaluating
15 the potential for a resolution in which payment schedules or amounts may
16 be modified or other workout options may be agreed to, and for whatever
17 other purposes the court deems appropriate. Both the plaintiff and the
18 defendant must make good faith efforts to reach a mutually agreeable
19 resolution. Such good faith efforts must include, at a minimum, follow-
20 ing the United States Department of Treasury Home Affordable Modifica-
21 tion Program guidelines issued on March fourth, two thousand nine, and
22 any amendments thereto.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09652-01-1

A. 5856 2
1 § 2. Subdivision (a) of rule 3408 of the civil practice law and rules,
2 as added by chapter 472 of the laws of 2008, is amended to read as
3 follows:
4 (a) In any residential foreclosure action involving a high-cost home
5 loan consummated between January first, two thousand three and September
6 first, two thousand eight, or a subprime or nontraditional home loan, as
7 those terms are defined under section thirteen hundred four of the real
8 property actions and proceedings law, in which the defendant is a resi-
9 dent of the property subject to foreclosure, the court shall hold a
10 mandatory conference within sixty days after the date when proof of
11 service is filed with the county clerk, or on such adjourned date as has
12 been agreed to by the parties, for the purpose of holding settlement
13 discussions pertaining to the relative rights and obligations of the
14 parties under the mortgage loan documents, including, but not limited to
15 determining whether the parties can reach a mutually agreeable resol-
16 ution to help the defendant avoid losing his or her home, and evaluating
17 the potential for a resolution in which payment schedules or amounts may
18 be modified or other workout options may be agreed to, and for whatever
19 other purposes the court deems appropriate. Both the plaintiff and the
20 defendant must make good faith efforts to reach a mutually agreeable
21 resolution. Such good faith efforts must include, at a minimum, follow-
22 ing the United States Department of Treasury Home Affordable Modifica-
23 tion Program guidelines issued on March fourth, two thousand nine, and
24 any amendments thereto.
25 § 3. This act shall take effect immediately; provided, however, that
26 the amendments to subdivision (a) of rule 3408 of the civil practice law
27 and rules made by section one of this act shall be subject to the expi-
28 ration and reversion of such subdivision pursuant to subdivision e of
29 section 25 of chapter 507 of the laws of 2009, as amended, when upon
30 such date the provisions of section two of this act shall take effect.